Credit counseling involves a negotiated reduction in payments with each of your creditors. Creditors will often put a statement onto the credit report that says you are using a counseling service – this may harm your credit rating depending upon your situation.
Many agencies tell you that it will take a certain amount of time for your repayment plan to be completed, but what you may not be told is that it all depends upon what your creditors accept as repayment. Creditors hold the cards in this situation – some will drop the interest rates, some won’t, some will accept the counseling plan, and some won’t. Each individual plan is different and yet creditors must be universally satisfied. If not, your repayment plan can take many more months – even years – longer than the agency originally may tell you it will take.
Many credit counseling agencies are funded by the major credit card issuers. This means that counseling agencies say they are working for you but are actually working for the credit card companies. If your counseling agency is accepting payments from credit card issuers then they may not be working in your best interests.
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